April PMI signals second-best gain in manufacturing sector in 42 months

• India’s manufacturing activity eased in April and signalled the second-best improvement in three-and-a-half years as per HSBC India Manufacturing Purchasing Managers Index (PMI)

Highlights:

• Domestic demand rising faster than export orders.
• Output growth slowed but was still the second-fastest in 42 months.
• Bolstered by current and anticipated upticks in demand, manufacturers reported higher confidence levels with expectations of higher output a year ahead.
• Firms added employees at a moderate pace, which was still the quickest since September.
• Even though input costs rose, producers took input purchases to the highest level since June, and expansion of stock inventories was the third-strongest since early 2005.
• Expectations are that demand conditions will remain conducive to growth supported inventory-building initiatives.
• Price gains were reported for materials like aluminium, paper, plastics and steel,
  • producers last month raised selling prices at the fastest pace in three months, noting that labour costs had also gone up.
• Higher costs of raw materials and labour led to a modest uptick in input costs, but inflation remains below the historical average.
• However, firms passed these increases onto consumers through higher output charges, as demand remained resilient, resulting in improved margins.

Prelims takeaway:

• PMI